Your Guide to the Canadian Real Estate Market in 2021

Affordable mortgages, international immigration, low unemployment rates, and limited housing stock are just some of the factors that have made Canada’s real estate market one of the hottest in the world over the last decade. Despite a global pandemic and unprecedented economic upheaval, 2020 was once again a record year for housing sales with significant growth in regions across the country.

If you’re thinking about listing your home or buying a new property in 2021, here’s a snapshot of how the Canadian real estate market has changed over the last 12 months and some predictions for what to expect in the coming year.

[Photo Credit: Vasyl]

Housing prices typically plummet during times of crisis due to economic instability. And while industry experts predicted a housing bubble burst at the onset of the pandemic, Canada’s real estate market has shown incredible strength and resiliency over the last year. According to the Canadian Real Estate Association (CREA), resale housing activity hit an all-time high in 2020 with more than 551,000 homes sold over the Canadian MLS System, an increase of 12.6% compared to 2019.

“The Canadian market has been very steady for years and a worldwide pandemic didn't slow down interest,” explains real estate broker Duncan Harvey of Harvey & McCreery - RE/MAX Aboutowne Realty Corp., an Oakville-based agency that works with clients in Toronto and across the GTA. “Homes for sale in and around large city centres are in short supply. A lack of inventory and historically low interest rates are causing increased demand and competition among home buyers.”

New public health guidelines and social distancing protocols have resulted in the closure of schools, gyms, retailers, and businesses. With many of us spending more time at home than ever before, houses now function as offices, schools, and fitness studios, which means buyers are looking for properties that can accommodate their new needs.

In the past, condominiums and townhouses in city-centres were sold at a premium thanks to their proximity to downtown amenities like restaurants, boutique shopping, sports arenas, and theatres. But with the lifestyle changes brought on by the pandemic, we’re starting to see a radical shift among Canadian homebuyers. Condo sales in major metropolises such as Toronto and Vancouver softened significantly in 2020. “Condo pricing continues to rise, but not at the same pace and not the same intensity of offers,” notes Harvey.

On the flip side, realtors are seeing greater demand for single-family homes in suburban areas and satellite cities like Hamilton, Niagara, and Kitchener-Waterloo that are within commuting distance of larger urban centres. “Many homeowners no longer have to commute into the downtown core for work,” notes Harvey. “With this change in lifestyle, they’re gravitating to homes with more square footage and larger outdoor spaces.”

The red-hot real estate market in 2020 was propelled by all-time high prices in growth regions across Southern Ontario, British Columbia, and Quebec, particularly in Canada’s most active and expensive housing markets: Vancouver and Toronto. An increasing number of homeowners are setting their sights even further out from city centres, opting to take advantage of permanent work-from-home policies and relocate to smaller rural communities or invest in vacation homes in cottage country. Some of the fastest-growing recreational property markets in Canada include Ontario’s Kawartha Lakes and Muskoka Lakes regions, the Gulf Islands in British Columbia, and the Eastern Townships in Quebec.

Even with the COVID-19 crisis continuing to impact daily life, market activity remains on a healthy trajectory in early 2021 with prices continuing to rise due to housing stock shortages. A preliminary 2021 Housing Market Outlook Report from RE/MAX estimates a 4 to 6% increase in average residential sales price nationwide, while CREA predicts the average price of a home will jump by more than 9% this year to $620,400. Experts are even anticipating that weaker markets like Alberta and Saskatchewan will see prices pick-up in 2021 following several years of depreciation.

“People are looking for homes to accommodate their changing lifestyle needs, money is cheap to borrow and inventory remains low,” Harvey reiterates. “If those factors continue to be a reality in Canada, then so will our booming real estate market. Overreaching or being too leveraged is always a risk, but if you want to move up or move out, now is a good time to do it.”